In this QSC matter, an application for the winding up of a company being heard at trial, an issue arose as to the admissibility of the forensic accountant report prepared by the accounting expert and the two ultimate sets of conclusions expressed in his report.
HENRY J:
…
The present tension is in part whether the sources of data authored by others were within Mr G’s [the forensic accountant] field of expertise.
It may be accepted to some degree of divergence in the fields of expertise as between the expert witness and the source author will not be fatal. There are after all, subsets of expertise within fields, just as there can sometimes be multi-disciplinary teams of experts drawn from different fields who, collaboratively, author publications. An example of the latter encountered from time to time in personal injury cases, is actuaries working in tandem with medical experts to generate articles about the impact on life expectancy of certain injuries.
Where there is some divergence, it is logically necessary to consider whether the nature or degree of overlap between the fields under consideration is such that the expert witness’ expertise equips the witness to know the trustworthiness of the source and comprehend the source’s methodology and data, including its reliability. If the relevant expertise does not so equip the witness, the exercise would not have the characteristic of accepted methods of professional work, and would be no different from a lay person impermissibly alleging some facts which he or she has learned of by reading of them in some publication.
In the present case, there was a marked difference regarding this quality in Mr G’s testimony about the IBIS report, as compared to his testimony about the Payscale.com information. In summary, it was just present in respect of the IBIS report but not present at all in respect of the Payscale.com information.
Mr G is an experienced professional accountant with expertise in forensic accounting. His expertise renders his forensic findings based directly upon the company’s financial information admissible. Those findings, though, relate to the uncontroversial first aspect of each of his ultimate conclusions.
His expertise as relevant to the second aspect in each instance, by which he adopted the IBIS report and the Payscale.com information, appears to be his expertise in business valuations, business restructuring and turn-around management referred to in his summary of expertise in annexure 1 to his report. That is a range of expertise as to the financial health of companies, described by Austin J in ASIC v Rich (2005) 190 FLR 242 [278] as a broader field of expertise in accountancy and auditing.
One can readily understand that Mr G’s knowledge and understanding of data of the kind referred to in both external sources at issue here, would be integral to his application of his expertise to the topic of the financial health of companies, and equip him to comprehend it and assess its reliability and the trustworthiness of its source in a way readily distinguishable from mere lay reliance on a publication.
That reasonable inference gives good reason for adopting a liberal attitude toward admissibility here. Mr G described the IBIS reports as industry benchmark reports commonly used, not merely by him, but by lots of other forensic accountants. Implicit in this is comprehension of the trustworthiness of the source and reliability of its data. The respondent’s counsel submitted the evidence fell short, beyond satisfying the subjective requirement in Mr G’s view, of the trustworthiness of the source. The objective test was described in the following way in another passage from Wigmore, cited in Borowski v Quayle at 388:
“There is an objective test, in that the habitual use of the work by the trade or profession has tested its usual and practical accuracy and has sanctioned its trustworthiness.”
I infer on the balance of probabilities, from Mr G’s reference to the use of IBIS reports by his fellow professionals, that those in his field do sanction the trustworthiness of IBIS reports. I would also infer Mr G comprehends the IBIS reports’ methodology, more readily drawing that inference because the report itself contains comprehensive analytical detail in stark contrast with the spartan information in the Payscale.com document.
In further stark contrast, the high point of Mr G’s testimony about Payscale.com was that he used it as a source in his work. He is unaware of it being used by others in his field. He seemed unaware of Payscale.com’s methodology, merely observing, in effect, that they do their own research and settle on their own benchmark figures. His response to a question about Payscale.com’s reliability as a source went to its use and was unresponsive as to its reliability.
Payscale.com may well be a handy desktop tool, but the evidence does not support the conclusion that Mr G’s comprehension of the Payscale.com information, distinguishes his reliance on it as being any different from a mere lay person’s reliance on it. The Payscale.com information is not an admissible basis for Mr G’s adoption of the hourly rate relied upon to in turn, opine the salaries exceeded what would be expected in the industry. That adoption and opinion in the report occurs in paragraphs 7.13 to 7.17 inclusive, and 8.6. Accordingly, strike out and disregard those paragraphs.
For the reasons given, and while the issue is very finely balanced, in the end we are satisfied Mr G’s reliance on the IBIS report does meet the basis rule. That finding does not, of course, preclude challenge to the weight to be given to the evidence about an opinion premised upon the IBIS report.
Another more specific basis submitted for exclusion in respect of the IBIS report, was that it contains inadequate information to allow its meaning to be determined. The issue, in effect, is whether its content is sufficient to allow Mr G to adequately comprehend it, and he was not cross-examined on voir dire about that. Observing the report’s substantial detail bolsters the inference of Mr G’s comprehension of its methodology. Mr G can, of course, be tested in cross-examination about this issue, which may well undermine the weight to be given to his evidence. However, we reject the submission insofar as it goes to the issue of admissibility.
